Cheaper by the Dozen: the race for the $3000 car
Reporting on one luxury car hitting the market after another and a seemingly endless race for the latest in technological breakthroughs, it seems hard to believe, but the fiercest competition in the automotive industry is emerging in the ultra-low cost segment. As markets like India and China continue to develop, their billions of citizens are moving up from bicycles and scooters to low-cost cars, and the sticker prices keep getting lower and lower.
Four years ago, India-based Tata Motors vowed to make a car which will sell for $2500. It seemed like a joke at the time, but that car is almost ready to hit the market, and the competitors are getting ready to put up a fight. With its bare-bones Logan sedan, Renault has the leg up on other automakers including Toyota, Volkswagen, Fiat, PSA and GM Daewoo, which are all preparing to get in on the low-cost market.
Carmakers are keeping costs down by developing the cars in India, and though the profit margins are dramatically lower than in premium segments, the companies are clamoring to establish their footholds in the emerging markets and hope that the volume will make it all worthwhile.
While the ultra-affordable subcompacts are being designed with developing countries in mind, automakers are surprised to find their no-frills offerings are being received well even in Europe, where customers see the savings as a worthwhile alternative to spending thousands more on higher-priced cars. Standard safety features and emissions control mean that a car that would cost $3000 in India costs $6-7000 in a Western country, but even at those prices the cheap imports undercut anything else on the market by thousands. It's being hailed as an impending revolution in the automotive industry every bit as pivotal as was the Ford Model T.
[Source: Business Week]
Reader Comments (Page 1 of 1)
LaughingTooHard 8:01AM (4/23/2007)
There goes Suzuki's sales in India...better hope is better than the Yugo. Wait it isn't a Hybrid model with super cool LCD showing consumption with BIG NUBMERS? No chance for US sales! Good luck Tata!
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Justin 8:03AM (4/23/2007)
It certainly makes sense this could be done. After all, most items on a car that cost us money arent really necessary. If you're looking for nothing more than a people-mover things like leather, stereo, A/C are all superfluous and increase the price.
And as the article said, safety features and emissions aren't required overseas. I feel they should be but what is likely is they'll need their own number of deaths and environmental crises to learn for themselves. Hopefully by then the economy will be more sustainable for more expensive, safer vehicles.
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Caleb 8:56AM (4/23/2007)
The cost of the materials to build a car are actually low. It is the wages, pensions, health care and profit that make a car cost so much. It costs VW $2400 in materials to build a Golf in Germany. It costs Renault about $1800 to build the Logan pictured.
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Chris 9:10AM (4/23/2007)
Why would you aim for the US? It's a crowded market used to very crappy cars, but not _that_ crappy. It's "only" 300M of customers too. eg. India - more than 3 times that amount.
They're going to have very little/crap to compare to, so its an easy market to sell a car in so long as it's priced right.
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Dinger 9:11AM (4/23/2007)
An all new army of cars in India and China without emission controls?
We'd better hope that the Global Warming skeptics are right.
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MikeW 9:27AM (4/23/2007)
Doesn't this go against that WHO thing.
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Barney 9:47AM (4/23/2007)
I wonder if that is why GM is putting up a factory there as well.
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Nirmeet 10:11AM (4/23/2007)
For India, the Emission Norms to be applicable have been named as Bharat Stage III. The difference in the Bharat Stage III and Euro III is that the maximum speed at which the vehicle is tested on the chassis dyno is limited to 90kmph for BS III, whereas it is 120kmph for Euro III. The emission limits are the same.
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Chet 10:10AM (4/23/2007)
"Without emissions controls" could be as simple as shedding air pumps and two-stage cats and letting the basic efficiency of modern powertrains do its thing. Will they be as clean as a 2007 US Honda Fit? Not for the first two minutes of runtime, but will they be as dirty as the trucks your gardener and cement contractor drive? Not for another dozen years or so... ;) You don't really think any of those emission controls are still going to be working in five years anyway, do you?
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Bryan 10:53AM (4/23/2007)
Oh boy I can't wait to import one of these into the US and then put a huge spoiler, spinner hub-caps, and anything else I can find at Pep Boys!! All my friends will be so jealous.
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DasBoese 11:27AM (4/23/2007)
It's ok for markets in developing countries, but here in Europe...
I've had a chance to look at the Logan this weekend at an auto show... with the words of a friend who came along: "It's for people who need a car, but don't want to buy a car".
For those who need a cheap, reliable workhorse, e.g. small companies or freelance workers, it's perfect. For everyone else... there are better alternatives.
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Bimmer 12:44AM (4/25/2007)
Tata said, it would be a four-door passenger car with a rear engine, essentially steel with some plastic parts. The car would have a continuous variable transmission—easier for women to drive— and would have both petrol and diesel versions. Source: auto.indiatimes.com
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ClutchCargo 1:55PM (4/23/2007)
I like the Logan. It is not a bad looking car. If it is dependable and undercuts current prices by a few thousand I would buy one. My worries would be with the Romanian Steel they use. It would have to be treated to withstand mid west conditions. Remember the rust of the 60's and 70's. I don't want to live thru that again.
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Stéphane Dumas 11:47AM (4/23/2007)
some folks already see a possibility of tuning the Logan you can view some pics at http://images.google.ca/images?q=logan+tuning&svnum=10&um=1&hl=fr&rls=GGLD,GGLD:2004-44,GGLD:en&start=18&sa=N&ndsp=18
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Avinash machado 1:16PM (4/23/2007)
Here is a review of the logan from a magazine from India.
http://www.bsmotoring.com/bsm/wcms/en/home/cars/tests/logan-diesel-070417.html;jsessionid=EB50D87B3AAF95826EA84BF7255110FD
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adelossa 5:39PM (4/23/2007)
hehe. tata in filipino means old person.
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Talis 6:41PM (4/23/2007)
I have been saying this for quite some time now. I find it hard to believe that a Jeep Wrangler would cost more than 20,000 dollars, but it does and I still can't tell why. (nor am I asking)
I remember when cars came with manual everything... manual transmission, manual breaks, manual roll up windows, manual adjusting rear view mirrors, even manual steering (but thats going back aways).
Even though cars like the Fit and the Yaris, and Aveo, and all the others are getting there they are still expensive.
The Aveo maxes at 13,500; the fit at 15,970; the Yaris at 12,050... these are way out of price, I bought my Mazda Protege5 for 15,000. and now the Mazda3 sells for close to 21,000!!!
I think a 5-7K car is just what western countries need, and costs can be saved everywhere from R&D to content.
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A&W 9:57PM (4/23/2007)
Hopefully someone will figure out a way to make an ultra low cost vehicle tough enough to make it in America.
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fm 12:28AM (4/24/2007)
I saw the Logan Wagon in France. Apart from the sideway opening rear hatch it seems really practical, especially the diesel version (toping off around 13000euros). It's def not for the people lookin to buy a benz||beamer but for the price of a traditional used car you get a new one with a few years of warranty. Of course the base models don't come with power stearing ( drove an old Renault 5 (LeCar for the US) during my stay in Europe and man parallel parking it was hard the first few weeks lol).
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VikramRao 11:47AM (6/30/2007)
I wonder how and where westerners think that in India and China emissions do not count ? Please do not foeet it is you who screwed up this planet with your V6 and V8 engines. All Indian cars rolling off the line today meet with strict India stage 2 and 3, our automotive evolution is happening much faster then the west, most cars sold in India give you an average 40 -50 mpg, how many companies in your own countries perform as well ?
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